FEATURE
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extent to which the FXPB business is integrated within the overall framework of the organisation. “Bank of America Merrill Lynch is a broad franchise, with so many different aspects, across the spectrum of products, which we make available to our clients.” But regardless of region, Dalton says the focus on FXPB is, and will remain, on customer service. He adds: “Clients need to know that there is a professional at the end of the line and that is the foundation of our business.”
Ed Pla, managing director, global head of FX prime services at UBS, responsible for FX prime brokerage, connectivity services and the provision of FX services to the bank’s equity and fixed income prime brokerage clients, says that nine years of cumulative investment in the bank’s proprietary FXPB platform is paying off and offers clients substantial productivity dividends worldwide.
While there are differing local requirements, Pla says there has been continued growth in demand for
FX trading and clearing services in what he says is a continuously evolving alternative investment sector and that new customers include those changing their prime broker, those diversifying their investment strategies and those completely new to the sector. He says: “Many clients are establishing a physical presence in local markets to better capture regional investment opportunities and service a growing number of regional investors.” To this end, while UBS FXPB is managed at a global level, it is serviced through regional centres in London, Zurich, Singapore, Tokyo and the US.
Increasing buy-side complexity
For Pla, it is the increasing complexity of the buy- side’s operating environment that is driving demand for FXPB. And yet the core value proposition of FXPB remains unchanged. Clients continue to seek greater efficiency by consolidating operational, reporting and margin management processes. He says: “To the extent ‘complexity’ equates with ‘cost’, FX PB offers scope for meaningful savings via the outsourcing of a variety of post-trade activities. In addition, FXPB offers clients the ability to leverage both cash and non- cash collateral more efficiently.”
Online access to trade averaging and allocations, real- time limit monitoring, online roll functionality and the ability for users to custom design and subscribe to automated reports are just a few examples of tangible operational efficiencies that UBS’s FXPB service offers clients.
He says: “Our strategy is simple. We couple high capacity, intuitively functional client technology with a hands-on, highly personalized approach to day-to- day client service. And our FXPB team coordinates closely with our FX franchise to ensure that as new execution products and services are introduced, we maintain a seamless ‘one stop shop’ approach to execution and post-trade services.” He adds: “Recent interest in the offshore deliverable Renminbi market is an example of how complexity, and demand for solutions, continues to evolve.”
Ed Pla
“Central clearing has the potential to create new challenges in the realm of documentation, collateral management, position margining, post trade processing, client reporting and cross asset class prime brokerage,”
42 | april 2011 e-FOREX
But Pla believes the biggest challenges facing FX prime brokers are yet to come, as the full impact of global financial regulatory reform, namely central clearing of OTC derivatives, takes shape. Tis is likely to add another layer of complexity to traditional FXPB as, in some regions, a two-tier system is likely to be required for traditional OTC clearing and central clearing.
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